TomTom Q1 revenue €264M, 3% operating margin

TomTom Q1 revenue €264M, 3% operating margin
TomTom today announced its financial results for the first quarter of the year with not much surprise since it announced a profit warning two weeks ago. Revenue for the quarter was €264 million, down 11% against the first quarter of last year, the operating profit was €9 million (3% margin), down 85%. These rather bad results are explained by the fact European retailers limited their inventory level to improve their balance sheets which consequently limited sell-in for TomTom.

In the United States TomTom made a better quarter because due to stock issue at the end of the previous quarter it finished the year with little if none inventories in the channels. As a consequence the first quarter sell-in was at normal level compared to Europe. This disparity of sales between the United States and Europe substantially increased the size of North America in the global revenue, the latter accounting for 32% in the first quarter (Europe 67%), against 12% one year ago (Europe 86%).

The “rest of the world” also had its own difficulties with a serious drop in revenue. It represented 1% of global revenue during the first quarter, (€2.64 million) against 2% one year ago (€5.92 million). TomTom CEO explained during the analyst call it was mainly due to a stock issue in Australia, where the revenue will come back to a normal level during the second quarter.

The average selling price in the quarter was €117, down from €141 in the Fourth quarter (a 17% decrease). This decrease resulted from planned price drop in anticipation of new products arrival, additional promotion to clear channel inventory and shift from Europe to the US where ASPs are lower.

Market estimates
TomTom estimated for the first quarter European PND market grew 40% in units (flat or slightly decreasing in value) representing 3.7 million pieces while the U.S. market grew 100% in units to 2 million products. TomTom expects the combined market will grow to 38 million units by the end of 2008, against 24.5 million in 2007. TomTom’s CEO Harold Goddijn estimates the penetration of navigation is around 20% in Europe and 10% in the United States; he expects 50% penetration on these markets can be reached within three to five years.

CFO Marina Wyatt said TomTom’s market share increased from 46% in January to 49% in March in Europe and moved from 23% to 25% in the U.S.

Market estimates (Source: TomTom) - click to enlarge
Market estimates (Source: TomTom) - click to enlarge


Wednesday, April 23rd 2008

Nav & Telematics | Sport and Outdoor | Location Based Services | Tech & Innovation | Market Data | Finance & Legal | People and Jobs | Voices of the industry | Press Releases